The former oil fabrication yard at Arnish Point on the outskirts of Stornoway is to undergo a major revamp at a cost of almost £5 million with a view to creating premises for a number of organisations representing a range of sectors.

Highlands and Islands Enterprise (HIE) is taking over the lease of yard - which has 32 years still to run - from the Stornoway Trust in order to progress the redevelopment of the facility, which has been empty since the closure of Lewis Offshore Ltd.

As part of the overall financial package, assistance is being sought from the European Regional Development Fund (ERDF) with HIE applying for funding in the region £1.7 million.  An application for planning permission has also been submitted to Comhairle nan Eilean Siar, which will go before the Environmental Services committee in late August.

Sandy Cumming, chief executive of HIE said: "I recognise the Western Isles has specific development needs, and it is quite rightly one of HIE's highest priority areas.  This multi-million pound investment in redeveloping the Arnish yard is further proof of that commitment.

"The exciting proposals we have for the site have the potential to create much needed jobs in the area and will contribute significantly to the economy of the Western Isles over the coming years.

"Tribute must be paid to local agencies including WIE, the Stornoway Trust and Comhairle nan Eilean Siar.  Their positive and focussed approach is helping HIE to realise this crucial development."

The project will see the upgrading of the large fabrication workshop at a cost of around £2.13 million. 

There will be general improvements to the site including better road access, introduction of mains water and rationalisation and improvement of the electricity supplies and distribution throughout the yard.  Plans also include the creation of new development land, installation of craneage and berthing improvements.  The total cost of the revamp will be in the region of £4.89 million and could create over 100 jobs as tenants for the site are secured.

The unveiling of plans for the site follow an investigation into alternative uses for Arnish.  A steering group comprising WIE, Comhairle nan Eilean Siar and the Stornoway Trust earlier this year commissioned the Halcrow Group to develop a masterplan for the Arnish yard.  As part of their research, Halcrow held detailed discussions with companies who had expressed an interest in locating to the area.

They concluded that the best way forward for Arnish was to develop the site in such a way that a variety of sectors could operate from the yard.  Interest has already been received from a wide range of organisations representing industries including aqualculture and renewable energy.

Wind tower manufacturers, Cambrian Engineering, have already confirmed their interest in the yard.  The company wants to establish a manufacturing facility within the upgraded main fabrication workshop at Arnish, dependent on securing financial support from WIE.  If successful, this particular venture alone could create up to 60 full-time jobs.

David Williams of Cambrian Engineering said: "The Government target of generating 10 per cent of electricity from renewable sources by 2010 is already stimulating the growth of a new energy sector.

"The forthcoming demand for offshore support structures, together with rising demand for larger onshore towers, requires Cambrian to create additional portside manufacturing capacity without delay.

"The Arnish site and large workshop are ideal for this purpose and can be brought into use in a short timescale.  We have been impressed by the joint enthusiasm and co-ordinated strategies of the Stornoway Trust, the local Council and WIE, as we are by Scotland's commitment to renewable energy projects.

"We are excited by the possibilities and have received very encouraging support for this initiative from out customers and the windfarm developers."

Other parties, interested in locating to the Arnish yard include netwashing/repairing businesses and a company seeking to set up a salmon by-product processing operation which will take salmon waste and produce high quality protein meal for the animal feed market.

Donnie Macaulay, chief executive of WIE commented: "Our masterplan for Arnish is in place and a planning application has been submitted to the Council which we expect a decision on in late August and thereafter, the application for ERDF funding.

"The Arnish yard has been a key element in the economic health of the area and the current interest from the alternative energy and aquaculture sectors has created the potential for the yard to re-emerge as a major local economic driver."

Mr Macaulay stressed the advantage of the skills base which exists in the area, saying this would help attract inward investors to the Western Isles: "WIE has maintained a database of former employees of Lewis Offshore Ltd since its closure in 1999 and continues to provide support in their efforts to secure employment."

Mr Kenneth MacIver, Chairman of The Stornoway Trust, said: "This announcement is most welcome. It is the first major step towards revitalising the Arnish Yard.  I am pleased that funding bodies and potential tenants are showing confidence in a new and prosperous future for the yard.

"Our ambitious plans for the yard have been made possible by the support, co-operation and confidence displayed by WIE and HIE since the Stornoway Trust resumed control over the yard.  The financial package now on offer will, hopefully, encourage more companies to locate and create much needed employment at Arnish."

Convener of Comhairle nan Eilean Siar, Councillor Alex Macdonald, commented: "This is excellent news for the Islands and will provide a welcome boost for our economy.   Arnish has in the past played a key role in the economy of the area and, with the co-operation of all the agencies involved, I am sure that it can once again be a significant economic driver."

It is hoped that the redevelopment of the Arnish Yard will be fully completed within two years but some tenants could move into the facility as early as November 2002.